Yahoo! settles click fraud

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Yahoo! has settled a class action case brought against it for click fraud.

The search giant will pay $4.95m in attorney fees and offer cash and discounts to thousands of unhappy advertisers.

There is no limit to the final amount Yahoo! may have pay out, but the company seems confident it won't break the bank.

The decision was made by Judge Christina Snyder in LA District Court. A retired judge will oversee the payment process. Yahoo! has also agreed to work with others in the industry to define what click fraud is.

Google settled a similar case in March but its payments were capped at $90m.

There are various forms of click fraud - from paying someone to click repeatedly on a competitors' advert, which they must pay for, to sophisticated re-direct schemes. The scale of the problem is disputed with estimates ranging from 12 per cent of total ad clicks to as much as 30 per cent. Both Google and Yahoo! refund unhappy advertisers, but the process is unclear and has cast a shadow over the real value of the market.